Short Lived Shorts

Mrs. Geppy and I are doing some major renovation work on our new house. Most of it we’re doing ourselves, and it’s a learning process! But I’m mostly enjoying it.

Our new kitchen went in the other week and our countertops were installed a couple days ago. Now that they had a couple days to set we were able to connect or appliances again.

Finally!

As I was perusing the aisles of Home Depot, looking for some parts to redo the plumbing for our kitchen sink and garbage disposal, EURUSD started spiking pretty hard.

I stood there, trap, plumber’s putty, and other accouterments in hand and flipped from short to long. That’s the second time in two weeks I’ve flipped my position.

Mobile trading is great but not fantastic

I love being able to trade from my iPhone. It’s convenient, and I don’t have to worry about being away from my computer. But I hate making trading decisions from my phone. I prefer looking at charts and making decisions from my desktop.

It’s one thing to add to a swing position, or take some profits. But making such a big decision like flipping one’s position… I just don’t like it. In hindsight, I’d wished I had waited until I got home to make a decision. But I was in the middle of a project and wanted to get it done, so I made a rash decision. I went long at ~1.1815, and it’s not like I wouldn’t have still gone long, but I would have made a well thought out decision and likely got in lower.

I’m not very happy with the way I handled that situation. In essence, I panicked.

Bad weeks happen

The week started great for me with an over 100 pip win. But then I started shorting against the trend for a scalp, and it got ugly. I shorted some more on Wednesday, and was seeing a nice profit, but that was erased last night and I ended up taking a lose on the shorts. I’m now long and a bit underwater.

I don’t even know if I made money this week. I may have, but that’s not the point. The point is I traded poorly and made questionable decisions. Reflecting on it, I really made one bad decision: shorting against the trend. That set me up to lose out on opportunity and make other poor decisions.

Moving forward

I’m not going to dwell on a poor week of trading. They happen, and it’ll happen again. So let’s take a look at EURUSD and think about what the charts are telling us. The weekly chart is extremely interesting. I love seeing pairs from a longer term perspective. Here we see EURUSD is in a major downtrend, but currently in an uptrend:

The break above ~1.1478 in July was significant, and you can see we’ve come awful close to retesting that zone as support in the last few weeks. We’ve now seen a significant bounce.

It’s also notable that we bounced right around the 200-week SMA.

These are all clear signs that the current bullish trend is healthy. A long term target could be the blue downtrend resistance line. That would likely fall somewhere in the 1.26’s… no doubt a long way off, but worth noting.

The daily chart is also bullish

On the daily chart it’s easier to see our 1.1478 horizontal resistance that was broken in July. But keep in mind, support is often a zone rather than a line, especially on higher timeframes. Notice how the 1.1478-1.1800 area has been both significant support and resistance:

There are a couple other things to note from this chart. First, the SMA’s are purely aligned still even after the correction from just under 1.2100. That’s a sign the uptrend is very much intact. Adding to that strength is the fact that the daily candle has closed above the 50-day SMA for the last three days. Both the MACD and RSI look like they have plenty of room to roam higher.

Everything on this chart is telling me that we’re in a bull trend, and even more pertinent, the consolidation is likely over. In terms of consolidation, we can see that the blue downtrend channel has been broken to the upside. In essence, this is a textbook example of a bull flag.

The lower time frames are also encouraging

It’s even easier to see the bull flag breakout on the 4-hour chart:

But also notice how price pushed up through the SMA’s, retraced, and seemingly put a bottom in just above the 200-bar SMA. The 50 and 100-bar SMA’s are now starting to turn higher and will likely cross the 200-bar SMA. This is a very bullish indication.

Drilling down to the 1-hour chart shows more bullishness (that’s a word, right?):

Again, the SMA’s are purely aligned and the Euro has been flirting with the 50-hour SMA but staying above the 100-hour SMA.

This leaves us with clear bullish trends starting at the 1-hour chart and going all the way up to the weekly chart. That’s something I love to see, and I’ll bet heavily in that direction when so many different timeframes line up. I wouldn’t be surprised to see a big move higher in EURUSD through the coming weeks and rest of the year.

Who’s with me?

Geppy Forex

I began trading forex in 2005. It took me seven years to figure out how to be consistently profitable. I blog in an effort to hopefully help other aspiring traders become successful much sooner than I did.

4 thoughts on “Short Lived Shorts

  1. Yeah that’s a pretty darn solid bullish set of charts we have there. Today’s sharp selloff for 75 pips may have offered the best shot yet at a value long. I plan to enter now (at 1.1768) and keep stacking as we go. Will add again above 1.1880. I’m happy ride some drawdown if required with this first entry. Of course, the above applies until Draghi does something to change my bias.

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